Friday, 16 March 2007

Transcript from Arirang Radio "Riding Home" March 16th

Monday to Friday I get to contribute a report on one of the day's top stories to the Arirang Radio program, Riding Home. This week my focus has been on developments regarding the U.S. Treasury's final report on the Banco Delta Asia, the Macau-based lender accused of laundering money for North Korea. As we head into the weekend, this "resolved but unresolved" issue casts a lengthening shadow over the six-party talks that are scheduled to convene in Beijing on Monday.

"Riding Home with Chris Gelken"

DJ: North Korea can now move ahead with the implementation of its initial steps to denuclearize, now that Washington has resolved its financial disputes with Pyongyang. That's according to Washington's top nuclear negotiator, Chris Hill speaking in Beijing today. Well, joining us to discuss the prospects for that is Chris Gelken, Senior Associate Editor from the Korea Herald.
Chris, with the next round of the six party talks set to convene on Monday, it seems Washington is rather on the defensive over its handling of the Banco Delta Asia issue.

CG: Indeed. It is hard to imagine that they really expected their decision to cut the BDA off from the world financial system to be welcomed by anyone – and certainly Washington's action has come in for heavy criticism from the Macanese and Beijing authorities. You are absolutely right, they do seem to be on the defensive or in damage control mode.

DJ: The North has yet to make any official statement regarding the decision by the U.S. Treasury, but reaction was swift and quite harsh from Macau and Beijing, right?

CG: Yes, we were seeing lots of expressions like “deeply regret” and so on, and on a diplomatic level, this is a pretty harsh condemnation of Washington's actions. As I mentioned yesterday, one analyst pretty much summed it up by saying that on the one hand Washington has kept to its side of the bargain by wrapping up the Banco Delta Asia issue within the 30 day time limit agreed under terms of the Beijing Agreement, but on the other, it still allowed hardliners in the Bush administration to punish the bank for doing business with the North. Now whichever way you look at it, this was almost certainly meant as a warning to other banks around the world to cut links with the North, and keep them cut.

DJ: What has been the reaction from the bank itself?

CG: Well yesterday the bank chairman, Stanley Au told reporters in Beijing that he was “not worried.” Today in Hong Kong, Au said the bank would challenge the decision and the conclusion of the U.S. Treasury investigation. Au emphatically denied the bank had any knowledge of money laundering by North Korea. He did add, significantly, that the bank is not prepared to resume any activity with Pyongyang. The United States, meanwhile, said it would share the results of its investigation with the Macanese authorities. Now remember, they have also conducted their own investigations and concluded there was no evidence of criminal activity. Lawyers for the small family owned lender admit that they did not have the technology to check large batches of U.S. currency for fake bills, for example, saying they relied on bigger banks to authenticate cash deposits from North Korean depositors. So, according to the Macau authorities, at most the BDA is guilty of not being the most efficient institution on the block. Perhaps that shortcoming was exploited by the North, right now we don't know. So it should be quite interesting to see their response to the American evidence.

DJ: The head of the International Atomic Energy Agency, who has just returned from Pyongyang, has told envoys to the nuclear talks that North Korea remains committed to denuclearization, but that conditions, obviously, are still attached.

CG: Yes, that's right. Mohamed ElBaradei said Pyongyang stressed that other countries in the process must also be equally committed, and repeated demands for the lifting of financial sanctions. Washington, as we have said, can claim it has resolved the Banco Delta Asia issue, but the Macanese authorities who now administer the bank, have yet to announce how much of the money that has been frozen for the past 18-months will be released. They are set to hold talks with a U.S. Treasury official this weekend, so its highly unlikely that any announcement will be made on this before the six-parties reconvene on Monday.

DJ: Many of the delegates are already in Beijing, how much of a shadow is this going to throw over the process?

CG: There are obvious concerns that this “resolved but unresolved” status could spill over and negatively effect the wider denuclearization process. It would be easy to say – look, its only 24 million dollars – get over it. But we also have to consider the wider implications of the U.S. Treasury's move – if it is perceived to be an act of spite – and we have already seen the reactions from Beijing and Macau that suggest this is the way Pyongyang might see it. Plus, remember the North is still subject to Japanese sanctions and United Nations sanctions, U.S. sanctions linked to the “trading with the enemy act” etc etc… So yes, it is only 24 million dollars, get over it. But the symbolism value of that money far exceeds its monetary worth. It always has. Getting over that isn't going to be so easy.

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